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Industry News

Delaware offers model for other states on business incorporation law success

South Dakota is trying to make a run at Delaware's success with business incorporation -- precisely by following the First State's example.

South Dakota is trying to make a run at Delaware's success with business incorporation -- precisely by following the First State's example.

South Dakota has made headlines in recent weeks for purportedly beginning to encroach on Delaware's territory as the premier state for business incorporation in the country. Yet, a closer look at this "battle" for incorporation supremacy — one that's still well in its early days, as Delaware continues to easily lead the field for incorporation — reveals that South Dakota is making its push at the market precisely by following the First State's example.

One key pillar of Delaware's incorporation success, which Harvard Law School professor Mark Roe notes as something that South Dakota should emulate for similar results, is the state's Court of Chancery. This court was specifically established "to handle business matters exclusively and has built up a formidable infrastructure of specialized lawyers, judges and case law," writes the Rapid City Journal, a local news publication. Developing a similar court system would be key for South Dakota, or any state for that matter, looking to reap the same kind of success that Delaware has had.

But more than that, other states would have to provide a reason about the benefits of incorporating in, say, South Dakota over Delaware in the first place, and why it may be worth it to go anywhere else.

"It's a hard thing to do nowadays, since Delaware has sufficiently cornered the market," Roe tells the news source. "It might take a year to 18 months to get the effort going, but then to start actually attracting corporations and keeping them, it will probably take longer."

Whether anything comes of this remains to be seen, but for now at least, the fact remains that if you're seeking somewhere ideal for incorporating your business, there's no better place in the nation than Delaware.